Question
a.
IRR cannot be used when cash flows are not conventional
b.
IRR fails to consider the time value of money
c.
IRR assumes reinvestment at the same rate as the project
d.
IRR leads to multiple rates of return
Posted under IC 89 Management Accounting
Interact with the Community - Share Your Thoughts
Uncertain About the Answer? Seek Clarification Here.
Understand the Explanation? Include it Here.
Q. What is a limitation of the Internal Rate of Return (IRR) when comparing two or more projects to select the best one?
Similar Questions
Explore Relevant Multiple Choice Questions (MCQs)
Q. What is a drawback of the Internal Rate of Return (IRR) when cash flows are non-conventional?
View solution
Q. What is the purpose of the Modified Internal Rate of Return (MIRR) technique?
View solution
Q. What does the MIRR calculation involve?
View solution
Q. How is the terminal value (TV) of the Cash inflows expected from the project calculated in the Modified Internal Rate of Return (MIRR) method?
View solution
Q. How is capital budgeting defined?
View solution
Q. What are the steps involved in the capital budgeting process?
View solution
Q. What principle does the Pay-back Method rely on to determine the worthiness of a project?
View solution
Q. In the context of the Rate of Return on Original Investment method, what does management do to accept a project?
View solution
Q. What principle does the Discounted Cash Flow (DCF) Method rely on?
View solution
Q. What does the Net Present Value (NPV) rule say about project acceptability?
View solution
Q. How is the Internal Rate of Return (IRR) on a project defined?
View solution
Q. What does the Modified Internal Rate of Return (MIRR) method do to overcome a drawback of the IRR method?
View solution
Q. In ______________, a variety of aspects are randomly tested and results are put into use to identify associated risks and to make proper analysis thereof.
View solution
Q. Under which of the following methods of capital budgeting is the rate of return determined on the figures or data for income and investment derived from accounting statements?
View solution
Recommended Subjects
Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.
Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!
